At what point do higher commodity prices become a really serious obstacle to recovery in the west? Many business people would say that, with the price of a barrel of oil at $120-plus, we're already there. To judge by the first-quarter GDP figures from the US, they have a strong case. Growth slowed to an annualised rate of 1.8% in the first three months of 2011 – that is quite a comedown from 3.1% in the previous quarter.

The US, of course, has problems beyond the higher price of oil and food. Large spending cuts by individual states are off-setting the federal government's efforts to stimulate the economy. But rising commodity prices are starting to dominate the short-term picture.

Capital Economics calculates that, in nominal terms, disposable incomes in the US increased by as much as 6.8% in the first quarter thanks to the cut in payroll taxes. But once higher food and energy bills are included, the increase in disposable incomes was just 2.9%. That's a very big difference.

The US outlook is starting to look horribly like Britain's – higher than expected inflation, lower than expected growth and policymakers praying that commodity prices start to fall soon so that interest rates can be kept low.

Ben Bernanke, chairman of the Federal Reserve, did his bit to sustain flagging spirits by saying that rising prices would prove "transitory" and that the growth figures would also improve soon. He may be proved right, but it is also clear the Fed has run out of monetary ammunition.

The oil price is now the key. When it passed $100 a barrel in February, the hope was that a retreat would quickly follow. Now the price has been stuck above $120 for almost a month, kept high partly by the plunging dollar. A spike or reality for the rest of the year? The answer is becoming critical.